WT Business Beat

By Nick Wakeman

Judge pauses JEDI case as DOD investigates conflicts of interest

After a request by the federal government, the U.S. Court of Federal Claims has put Oracle’s lawsuit challenging the JEDI solicitation on hold so it can investigate possible conflicts of interest involving the procurement.

This order is a vindication of sorts for Oracle because conflicts of interest are among the allegations at the center of its lawsuit against the Defense Department and its decision to make the Joint Enterprise Defense Infrastructure contract a single-award vehicle.

The government’s motion requesting what is called a “stay” is sealed, so details of why the government is asking for the pause are not available. Lawyers for Oracle and the government said they could not comment because of the ongoing litigation, and Amazon Web Services did not respond to a request for comment.

But Judge Eric Bruggink’s order is public and very short:

“For good cause shown, the court grants the government’s unopposed motion to stay this case while the Department of Defense reconsiders whether possible personal conflicts of interest impacted the integrity of the JEDI Cloud procurement. The government is directed to file a status report within five days of a final decision by DOD.”

In Oracle's since-denied protest with the Government Accountability Office and court filing, the company argues that two DOD employees had ties to AWS that affected the JEDI procurement. Those employees either worked or consulted with AWS before going to DOD, or they went to work at AWS after leaving DOD.

DOD staffers Anthony DeMartino and Deap Ubhi worked on the development of the JEDI contract. DOD cleared both to work on the procurement because it had been more than a year since they had worked with AWS.

Ubhi recused himself from the JEDI procurement once AWS started talks with him about buying a company he founded. He eventually left DOD to go to work with AWS.

DeMartino was a consultant to AWS prior to working at DOD, where he served as deputy chief of staff to the defense secretary and chief of staff to the deputy defense secretary. He left DOD before the final JEDI solicitation was released to found Pallas Advisors, a strategic advisory firm.

GAO ruled against Oracle’s conflict of interest allegations but in part said it was too early for the company to make that allegation.

The contract had not been awarded yet so Oracle couldn’t show that a conflict of interest had an impact against them. Conflict of interest claims are generally raised after an award is made.

Earlier court filings have said that DOD is looking at the conflicts of interest as it evaluates proposals for the $10 billion contract, which is routine.

So what does the court’s ruling mean?

It could be routine. DOD may just need some more time to complete its conflict of interest investigation.

It could mean there are problems with DOD’s handling of DeMartino and Ubhi. Are they enough to derail JEDI? We don’t have enough information to speculate.

The judge’s order gives no timeline for the government to complete its evaluation of the possible conflicts of interest. But it does say that the government has five days to report to the court once that evaluation is completed.

This is somewhat of a victory for Oracle though it might be short-lived. But it at least gives some more credence to their charges of conflicts of interest. But who knows where that goes from here.